Swisscom Ag · SIX:SCMN
Swisscom — Q2 2021 Earnings Presentation
42 slides from Swisscom's earnings presentation, Aug 5, 2021
Slide 1: Q2 2021 results
Analyst & investor presentation Q2 2021 results 05 August 2021
Slide 2: Agenda
Agenda Introduction Louis Schmid, IR 1. Highlights Urs Schaeppi, CEO 2. Business review Urs Schaeppi, CEO 3. Financial results Eugen Stermetz, CFO Questions & answers all Appendix 2
Slide 3: Highlights
1 Highlights 3
Slide 4: Q2 highlights
1 Q2 highlights Pushing best customer experience Drive product innovation and best services to generate maximum value in B2C Leading in Switzerland Numerous test wins underpinning Levering unique B2B position Swisscom's leadership position New POS system and Security offerings for Swiss SMEs Growing
Slide 5: Q2 market performance
1 Q2 market performance Steady Q2 performance in Switzerland: BB and TV stable, postpaid up. Italy growing - especially in mobile Swisscom Switzerland (RGUs in k) Fastweb (RGUs in k) +227 +122 +27 +19 +20 +11 +19 +9 Reported net adds +1 Q2 and H1 20211 -1 -6 -16 -20 -52 Broadband TV Fixed voice Post
Slide 6: Q2 financial performance
1 Q2 financial performance Strong Q2: net revenue +2.7%, EBITDA +8.8%, net income +19.3% and OpFCF proxy +24.0% Q2 EBITDA development in CHF mn and YOY changes in CHF Q2 2021 H1 2021 Underlying performance +51 Net 2'780mn 5'583mn +31 +10 +10 +45 1'193 +8.8% 1’097 revenue (+74mn, +2.7% YOY) (+140mn,
Slide 7: Business Review
2 Business Review 7
Slide 8: 2021 business priorities
2 2021 business priorities Execution fully aligned with strategy Continuously invest in Deliver on leading Strong commitment to Push Fastweb infrastructure access market position in operational excellence in its next chapter of Switzerland growth Deliver maximum Lever #1 market position Realise indi
Slide 9: Undisputed #1 in Switzerland
2 Undisputed #1 in Switzerland Continuous investments into outstanding customer experience key in a quality-conscious market Swisscom with several network test wins in Q2 … … and making Switzerland gigabit ready • The best mobile experience Mobile LTE 99% of population coverage 5G 98% +2pp YTD of po
Slide 10: Lead with best product experiences in B2C
2 Lead with best product experiences in B2C Defend and attack through strong differentiation in value and prices Constant development of Swisscom's offerings with several news in Q2 Improve broadband Ensure outstanding Attack with Foster FMC leadership proposition customer satisfaction 2nd brand inO
Slide 11: B2C operational results
2 B2C operational results Robust KPIs: RGUs solid, churn rates improving, ARPU trends unchanged and FMC penetration further up Wireline Q1 21 Q2 FM converged RGUs in k Churn rate p.a. ARPUs in CHF (YOY) broadband subs 1'733 1'733 • Solid RGU base 11.6% 88 88 1'512 1'513 • BB share of 2nd/3rd 9.0% br
Slide 12: Swisscom leverages its strong B2B market position continuously
2 Swisscom leverages its strong B2B market position continuously Offering new E2E customer solutions key to tap new revenue streams Swisscom with a new sales register (POS) system … … and Security solutions for SMEs • Demand for Security solutions increases due to growing cyber risks and attacs • On
Slide 13: B2B results
2 B2B results Q2 with slightly softer service revenue due to lower Covid-19 tailwind and ongoing Solutions growth Service revenue YOY changes in CHF mn W+ traffic and Q1 20 Q2 Q3 Q4 Q1 21 Q2 RGU base W- ARPU VAS revenue 2'502k CHF 31 CHF 23mn 1 -19 -17 Q2 20 2'504k Q2 20 CHF 33 Q2 20 CHF 31mn -21 -2
Slide 14: Cost initiatives and results
2 Cost initiatives and results Increase efficiency of Swiss operations while maintaining service and quality level Continuous optimisation of cost base On track to achieve cost target 2021 (YOY changes in CHF mn) Network and IT • Simplify infrastructure setup 2020 2021 • Drive efficiency in network
Slide 15: Swisscom Switzerland: financial results
2 Swisscom Switzerland: financial results OpFCF proxy improved thanks to slight top-line growth, strong indirect cost savings and lower CAPEX Net revenue in CHF mn (YOY) EBITDA in CHF mn (YOY) OpFCF proxy in CHF mn 4'103 Net revenue YOY +0.5% Q2 2021 Others1 1'797 EBITDA 2 +0.9% 332 (+10) Wholesale
Slide 16: Fastweb: network and commercial update
2 Fastweb: network and commercial update Providing best experiences everywhere Product: one further step towards OTT • Launch of new Internet box NeXXt, first integrated with Alexa in Europe • New loyalty program Fastweb UP Step forward on sustainability • Recognised among the first 150 companies in
Slide 17: Fastweb: Consumer performance
2 Fastweb: Consumer performance Solid results in line with expectations Fixed Mobile ARPU, churn, FMC penetration Broadband subs in k (YOY change) Mobile subs in k (YOY change) Churn benefit ARPU uplift (EUR/month, YOY) (YOY) +3% +20% 2’774 2’188 2’692 1’830 +26% -49% • Continuous • +20% YOY growth
Slide 18: Fastweb: Enterprise and Wholesale performance
2 Fastweb: Enterprise and Wholesale performance Growth confirmed Enterprise Wholesale Revenues in EUR mn (YOY) Revenues in EUR mn 1 (YOY) +9% +21% • Core services: strong YOY 68 increase of +33%, 244 56 mainly due to IRU- 10 7 Other related revenue 224 • +9% YOY driven streams by private and PA Core
Slide 19: Fastweb: financial results
2 Fastweb: financial results In line with FY guidance Net revenue in EUR mn (YOY) EBITDA in EUR mn (YOY) OpFCF proxy in EUR mn YOY 1’181 Net revenue Q2 2021 (+7%) 384 EBITDA1 (+5%) EBITDAaL3 192 +10 (+18) Wholesale 126 205 27 (+1) Lease expense2 (+5%) CAPEX -147 -9 13 OpFCF proxy (+0) (+18) EBITDAaL
Slide 20: Financial results
3 Financial results 20
Slide 21: Group revenue and changes by segments
3 Group revenue and changes by segments Revenue increase driven by positive contributions from Swisscom Switzerland, Fastweb and currency effects +41 +40 +10 +25 +9 +1 +10 +13 +20 +66 +74 -1 -19 Q1 Q2 -3 -3 -3 in CHF mn Underlying +107 (+2.0%) Swisscom Switzerland +19 (+0.5%) +81 +33 +140 Q1: +15, Q
Slide 22: Swisscom Switzerland: revenue changes and service revenue dynamics
3 Swisscom Switzerland: revenue changes and service revenue dynamics Top-line up thanks to Covid-19 tailwind, Solutions growth and final quarters with device decoupling effect H1 21 revenue changes by business drivers Service revenue evolution and Q2 21 changes in CHF mn Q1 2020 Q2 Q3 Q4 Q1 2021 Q2
Slide 23: Group EBITDA and changes by segments
3 Group EBITDA and changes by segments Strong underlying Q2: Swisscom Switzerland CHF +31mn and Fastweb CHF +10mn +23 +21 +45 +96 -4 +1 +6 +4 +10 +10 +10 +4 +13 Q1 Q2 -12 -1 -8 in CHF mn Underlying +60 (+2.7%) Q1: +9, Q2: +51 +49 +109 Swisscom Switzerland +38 (+2.1%) (+4.9%) Q1: +7, Q2: +31 +20 (+5.
Slide 24: EBITDA Swisscom Switzerland with OPEX changes and dynamics
3 EBITDA Swisscom Switzerland with OPEX changes and dynamics Operational excellence initiatives lower indirect cost base as expected and on a recurring basis +15 +4 +8 +15 +25 +25 +2 0 -9 -14 -8 -7 -22 +7 +9 Q1 Q2 -18 in CHF mn Underlying +38 (+2.1%) direct cost -48 (+5.9%) indirect cost +67 (-4.5%)
Slide 25: Capital expenditures
Capital expenditures 3 Invest in critical infrastructure of the future Swisscom Switzerland H1 2021 in CHF mn Q2 21 H1 21 Copper access, back- Group 543 1'083 bone & transport infrastructure Fibre (FTTx) CAPEX (-16, -2.9% YOY) (+8, +0.7% YOY) 24% 33% Swisscom 382 753 Switzerland (-27, -6.6% YOY) (-2
Slide 26: Free cash flow
3 Free cash flow FCF of H1 2021 primarily lower because of a different tax payment schedule compared to last year in CHF mn 2’317 -151 2'166 -1'083 1 2 -229 -25 646 1'083 -131 H1 21 -36 -16 Δ +109 -1 +108 -8 +100 -44 -65 -5 -73 -28 -115 2’208 -150 2'058 -1'075 -156 +3 761 983 H1 20 -87 +29 -11 EBITD
Slide 27: Net income
3 Net income Earnings per share up (+42% YOY) thanks to solid EBIT evolution combined with positive one-offs in CHF mn 1 2 tax rate 1 EPS 16.1% 20.17 H1 21 2’317 -1'087 -141 1'089 -33 -22 +217 -4 -201 1'046 -1 1'045 Δ +109 -9 +6 +106 -3 0 +269 -7 -55 +310 -3 +307 tax rate 1 EPS 16.6% 14.25 H1 20 2’2
Slide 28: Swisscom with 1st green bond in CHF
3 Swisscom with 1st green bond in CHF Well balanced and diversified maturity profile Sustainability at the heart of Swisscom Debt maturity profile as per Q2 2021 2) 1'405 • Swisscom recognized as one of the world's most sustainable 1'000 ICT companies1 as a result of systematic sustainability manage
Slide 29: Revenue and CAPEX outlook reiterated - EBITDA guidance increased
3 Revenue and CAPEX outlook reiterated - EBITDA guidance 2021 increased Net revenue of CHF ~11.3bn, EBITDA of CHF 4.4-4.5bn (up) and CAPEX of CHF 2.2-2.3bn reported sofar2 new in CHF mn figures 2020 outlook 2021 outlook 20213 Splits into: CHF ~8.6bn for Swisscom w/o Fastweb + Revenue 11'100 ~11'300
Slide 30: Questions & answers
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Slide 31: Appendix
Appendix 31
Slide 32: Key financials
Key financials Reported and underlying revenue and EBITDA in CHF mn 2020 2021 Change Q/Q Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported 2'737 2'706 2'758 2'899 11'100 2'803 2'780 +66 +74 Currency effect -13 -20 -13 -20 Underlying change +53 +54 EBITDA, reported 1'111 1'097 1'148 1'026 4'38
Slide 33: Swisscom Switzerland
Swisscom Switzerland Wireless ARPU and IFRS15 adjustments Swisscom Switzerland Swisscom Switzerland 47 44 45 43 45 43 44 43 43 42 43 42 36 35 35 34 36 35 35 34 35 34 34 34 in CHF in CHF Q1 20 Q2 Q3 Q4 Q1 21 Q2 Q1 20 Q2 Q3 Q4 Q1 21 Q2 Blended (reported) Blended (IFRS15) Postpaid (reported) Postpaid (
Slide 34: Pension plan amendments
Pension plan amendments Positive one-off EBITDA effect of CHF 60mn Facts Reported costs and outlook • Differences b/w IFRS and Swiss pension law: valuation • Reported 2020 vs. 2021 (H1 21 actual and FY 21 estimate) method and assumption (mainly discount rate) H1 20 H1 21 FY 20 FY 21 YOY • Ordinary I
Slide 35: Residential Customers (B2C)
Residential Customers (B2C) Segment reporting as per 30.06.2021 Q2 2021 Q2/Q2 30.06.2021 YoY Net revenue in MCHF 1) 1'124 2.1% 2'273 1.6% Net revenue increased Direct costs in MCHF -255 8.5% -534 10.6% driven by higher handset Indirect costs in MCHF 2) -163 -10.9% -334 -9.5% sales, however service C
Slide 36: Business Customers (B2B)
Business Customers (B2B) Segment reporting as per 30.06.2021 Q2 2021 Q2/Q2 30.06.2021 YoY Net revenue in MCHF 1) 759 -2.4% 1'537 -1.3% Net revenue decreased (-1.3%), Direct costs in MCHF -198 -2.5% -400 0.5% the decrease in service revenue Indirect costs in MCHF 2) -234 -0.8% -472 -2.3% (-4.4%) due
Slide 37: Wholesale
Wholesale Segment reporting as per 30.06.2021 Q2 2021 Q2/Q2 30.06.2021 YoY External revenue in MCHF 159 0.6% 332 3.1% Intersegment revenue in MCHF 71 7.6% 141 11.0% Net revenue in MCHF 230 2.7% 473 5.3% Revenue from external Direct costs in MCHF -101 6.3% -200 8.7% customers up by 3.1% due to BBCS g
Slide 38: Infrastructure & Support Functions
Infrastructure & Support Functions Segment reporting as per 30.06.2021 Q2 2021 Q2/Q2 30.06.2021 YoY Net revenue in MCHF 20 -4.8% 39 -7.1% Direct costs in MCHF -1 -66.7% -3 -25.0% Workforce expenses in MCHF -203 -4.7% -433 0.0% Contribution margin 2 Maintenance in MCHF -56 -3.4% -107 -4.5% improved b
Slide 39: Fastweb
Fastweb Segment reporting as per 30.06.2021 Q2 2021 Q2/Q2 30.06.2021 YoY Consumer revenue in MEUR 288 2.1% 574 2.1% Enterprise revenue in MEUR 244 8.9% 481 10.6% All customer segments Wholesale revenue in MEUR 1) 68 21.4% 126 16.7% report a revenue increase. Net revenue in MEUR 1) 600 6.8% 1'181 6.9
Slide 40: Other
Other Segment reporting as per 30.06.2021 Q2 2021 Q2/Q2 30.06.2021 YoY External revenue in MCHF 112 5.7% 216 0.5% Net revenue in MCHF 1) 265 7.7% 505 3.7% OPEX in MCHF 2) -216 4.9% -422 4.2% Net revenue up by 3.7% EBITDA in MCHF 49 22.5% 83 1.2% due to higher revenue EBITDA margin in % 18.5% 16.4% f
Slide 41: Investor contact
Investor contact Bild Louis Schmid Tamara Hackl Head Investor Relations Investor Relations Manager [email protected] [email protected] +41 58 221 62 79 +41 58 221 12 79 41
Slide 42: Cautionary statement
Cautionary statement Regarding forward looking statements • "This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations